The Porter 's Five Forces

1162 WordsSep 30, 20165 Pages
The Porter’s five forces is a competitive position analysis and business strategy format created by Michael Porter in 1979. The premise behind the format is to provide them with five forces that shape every industry. Mr. Porter 's theory is that if a company analyzed the information received from reviewing the five forces, the company would be able to compete in a higher fashion against its competitions. Following the five forces would allow a firm to determine the type of market or industry it is operating in. Each of the five works as an individual factor in the microenvironment, but one force could not exist without the out force in a stable economy. The five forces are Supplier Power, Buyer Power, Threat of substitutes, the threat of new entrant and Competitive Rivalry. Three forces affected the market horizontally while two affected, it vertically from each side. A review of the movie rental market from the Porter’s five forces. Competition Rivalry is at the center of the Diagram. This force receives pressure from all of the remaining forces. The pressure from those forces defines the way a competitor will be able to compete inside of an industry. A highly competitive market may prohibit additional competitors from entering the marketplace. Lower competitors are willing to lower prices cause a price war and maintain a low price that would slash or narrow a perspective competitor from entering the marketplace. Current industry leaders are already having market share

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